“I think if you look at past housing market cycles where we’ve seen higher borrowing costs or other shocks in the system, like job losses and what have you, that has resulted in softer market conditions for sure, but if you look at defaults, even over recessionary periods, in Canada, and certainly throughout Ontario, they remain remarkably low, in comparison to other jurisdictions like south of the border, and parts, of western Europe as well,” he stated.
“New home buyers and builders have taken a step back in the face of rising interest rates and inflation,” stated Dave Wilkes, BILD President, and CEO, in the report. Another way today’s steep interest rates are being felt is in the assignment sale market, where condo purchasers buy a unit at the pre-construction stage, and then sell that contract prior to the unit’s close. This allows investors to purchase units early and ride the resulting market appreciation over time as construction completes, and then sell to another investor or end user at the higher current market price.
“It’s the real estate market itself, where there’s a price decline and there’s still rate increases. Keep in mind, a lot of investors, they go variable when they buy an investment property. They don’t want to do a five-year fixed. And so right now, variable is a killer because it’s just going to keep climbing, and they have no idea when it’s going to stop,” she adds.